Cleveland-Cliffs slides as report shows Stelco idling plant over US tariffs

Cleveland-Cliffs Inc. stock plummeted by nearly 8% in late Monday trading, following reports that its Canadian subsidiary, Stelco Holdings Inc., intends to cease operations at a crucial Ontario processing plant. This move underscores the mounting market apprehension surrounding the escalating impact of trade tensions on North American steel supply chains.

The decision to halt production represents a significant setback for the Canadian steel industry, which has grappled with adapting to the U.S. 50% tariff under Section 232 of the Trade Expansion Act. While Ottawa took steps to curb foreign imports, Stelco contended that these measures were inadequate to offset the market downturn caused by limited access to the U.S. market.

To counter the adverse effects, Cleveland-Cliffs is reorganizing its operations by shifting its primary manufacturing emphasis to its more integrated Lake Erie Works facility in Nanticoke, Ontario. In an email to Bloomberg, Cliffs spokesperson Patricia Persico affirmed that overall steel production would remain stable, although the product mix would shift towards a greater proportion of hot-rolled coil.

The shutdown at the Hamilton facility is set to commence on October 9 and is projected to lead to roughly 350 job losses, according to reports from the Hamilton Spectator. As Hamilton Works primarily functions as a downstream finishing plant, directing upstream production to Lake Erie Works enables the parent company to maintain total tonnage while reducing higher-cost processing lines.

Stelco pledged to fulfill existing client orders throughout the transition while maintaining full capacity for hot-rolled steel shipments. Nonetheless, investors are primarily concerned about the overall margin compression, closely monitoring whether Cleveland-Cliffs can effectively absorb trade-induced demand adjustments without compromising profitability across its expanded North American network.